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I met Kathryn Gould longer ago than either of us want to admit. Kathryn has been the founding VP of Marketing of Oracle, a successful recruiter, a world class Venture Capitalist, a co-founder of a Venture Capital firm, a great board member, one of my mentors and most importantly a wonderful friend. During her career she made a big point of not telling you: she was one of the first women Venture Capitalist’s in Silicon Valley (along with M.J. Elmore and Ann Winblad) – “I’m just a VC.” Or one of the first women co-founders of a VC firm – “I co-founded a great firm.” She was twice as smart and just as tough as the guys. She has been a mentor and role model not just for a generation of women VC’s and CEO’s but for all VC’s and CEO’s – and I’m honored to have been one of them.
One of the reasons I took up teaching is my strong belief that it’s incumbent on all of us to make those who come after us smarter than we were.” So when I heard Kathryn gave the University of Chicago commencement speech I suggested that she reach out to a larger audience and share her decades of experience.
Her response? “The last thing I want is a bunch of people bugging me while I’m growing my grapes, flying, painting, playing music, and generally goofing off.” I pointed out that, “Now that you retired, what happens to all the knowledge and experience you’ve acquired?” She still demurred so I gave it one last shot. I sent her an email saying, “When you’re gone everything you learned goes with you. This really is bigger than you. I have two daughters starting careers and nothing could be more inspiring than hearing your story. You really ought to share your journey.”
So for the first time ever, she has. Here’s Kathryn’s story.
Why Give a Commencement speech
One of the more fun things I’ve been asked to do lately was give the commencement speech at the University of Chicago Booth School of Business in June 2014. What I didn’t tell them before, during, or after the talk was that I’d never gone to my own University of Chicago MBA graduation, nor had I gone to my BSc in physics graduation at University of Toronto. I’ve never been big on pomp, and I had fun jobs I wanted to go to right away after each of them. And to be fair, I wasn’t summa cum laude in either case. I was merely respectable, so there was no appealing ego trip involved. Anyway it was high time I went to a graduation.
The most personally interesting part of writing this speech was thinking about what I could say to the young women that I wish I’d heard at their age. (I heard nothing).
So, for the first time, I thought hard about what it was like to be a woman in a man’s business. Not thinking about it earlier was a survival strategy—because if I’d thought about it, I’d have wanted to TALK about it, and that would have been stupid. I was working and competing with men daily. And successfully. And the truth is, I like working with men. Being a physicist-turned-engineer, I have very little experience working with anything but men. So when members of the press or militant feminist types would question me about this stuff, I would avoid and be annoyed. Now that I’m retired I can speak out and let the chips fall. Still, a nod to Sheryl Sandberg for saying her piece while in the thick of it.
In the aftermath of the speech, I got the most resonance in two areas:
1) make unconventional choices that fit YOUR OWN aspirations
2) from women appreciating the advice to go around obstacles, and enjoying hearing from a fellow ‘dragon lady’
Actually it wasn’t “dragon lady,” it was a stronger, less feminine term — “Ball Buster” — but, hey, I couldn’t say that in a speech. Reason I know is that I’m still very close to most of the former CEOs from my boards. I ran this speech by a couple of them. Over time they had heard me referred to as that other term. They would jump to my defense – and they report that the people who said this had never met me –it was just the “word on the street.” Insidious, yes?
Anyway, mine is a study in making unconventional career choices (not that I recommend everybody go be a recruiter for a few years!), and searching for what you’re great at, and meant to encourage women to go right through those walls.
So they call you a “dragon lady”; so what?!
Here’s the speech:
2014 University of Chicago Commencement speech ‘Your Great Adventure’
“I’m so happy to be here today: First, to help you celebrate your success thus far, and more important: to celebrate your last day of doing what is expected of you —now each of you embark on your own great adventure—there is no ‘expected’ path from here on. You get to create your own history. No more tests, get into this school, get into that class, get this degree—now the real adventure begins. The second reason I’m glad to be here today is that 2 years ago, when Dean Kumar first asked me to do this speech, I wasn’t sure I”d even be alive, so I had to pass. More on that later.
So, about your adventure: should you have a plan? Maybe. But don’t follow it. Planning prepares the mind, and chance favors the prepared mind, but chance usually messes up plans! When I was where you are, 36 years ago (can ya believe it) I didn’t have a plan—but I did have an aspiration: I wanted to go to Silicon Valley and I wanted to work in startups. I had no idea how I was going to get from here to there. I was completely unprepared! We had literally one entrepreneurship course here in the mid 70s—taught by a guy who commuted in from Silicon Valley. Compare that to now—with our superb entrepreneurship curriculum, and I understand 70% of this class has either an interest or focus in entrepreneurship.
Computers were so different from now—arcane, annoyingly difficult— and interesting. But they weren’t really in Silicon Valley at the time—they were in Boston, Minneapolis, New York. So going to Silicon Valley wasn’t an obvious move at the time. It was the invention of the microprocessor that made it obvious for me. I quit my good job here and moved to the valley. Most people thought I was nuts. I had no idea what I was doing—just that I had to be there, and in a startup—so I took a job with the smallest company that made me an offer (passing up Intel, Tandem and Apple). It wasn’t a great choice, but I was THERE. But then, one our customers was Larry Ellison, with this little company that wasn’t even called Oracle at the time. I loved what he was working on (thanks to perspective in data management from my large company experience here—that prepared mind thing). So I joined Oracle when it was about 20 people, eventually becoming VP Marketing. And it was an amazing time. Larry was the best entrepreneur I’ve ever known, and completely unconventional…
What can you learn from this story so far?:
Put yourself in the way of success—get in front of an important wave and ride it.
Gravitate to what’s new.
Don’t be afraid to take a step down (Oracle was a $1 Million business, I had been marketing manager for a $100 Million business).
Build Your Skills Not Your Resume
Eventually I left Oracle, wanting to do another startup. Problem is, startups that have world changing potential are not that easy to find. I wanted another Oracle, not any old startup. So I did something completely crazy and unplanned—which looks brilliant only in hindsight! I noticed that I loved looking for a job, even tho I didn’t’ find a company I wanted to join. I liked meeting people, hearing the company plans, learning about their technology, figuring out if it was for real—all that was fun. How could I do that for a living? The answer of course, was Venture Capital, but that was not in the cards—as yet. I had met a few exec recruiters in the process and thought what they did was similar and interesting. So I started an exec search firm as a creative way to look for a new startup. Turns out that I quickly became one of the few best recruiters in the valley for CEO and VP levels, got to work with the best VCs and their startups. And who would have guessed—perfect preparation for the VC business. I ended up doing that for 5 years, and in the process saw about 80 startups in various stages of success and disarray. I developed a deadly accurate intuition on people, an unbeatable set of contacts, and loved working for myself in my little firm. By the 4th year, VCs were asking me to join them, partly for recruiting help, but more because I kept introducing them to startup investment opportunities. As you’ve heard, it’s excruciatingly hard to get in to the VC business, and there I was. Because I”d built some unique skills.
Plus, I had learned some stuff that you don’t get in business school:
- How to cold call –adrenaline, real time, 3 seconds to grab their attention—learn this!
- Also the adage As hire As, Bs hire Cs—absolutely true—be careful of the company you keep,
- And what goes around comes around. Help people with their careers, their ideas, contacts—and I’m serious, good things come back years later.
I also learned that the first time without a paycheck is a little scary.
Find Your Obession
I joined VC firm Merrill Pickard in 1989. My first IPO wasn’t until 1995—the VC business takes patience. Two companies I helped start in 1992, DCTM and Grand Junction Networks both became Stanford business school cases and very valuable, successful companies. I was on the way to my lifetime IRR of 90%. I loved the business, and I was good at it. But then, trouble. My two best partners went off to start Benchmark Capital, very successful to this day, so my firm was going to blow up. I went Boogie Boarding where I do my best thinking. I thought, gee, I could already afford to ride waves the rest of my life. That might be neat. But I couldn’t do it. I loved the business, couldn’t stop. So I started Foundation Capital in 1995. I loved starting my own firm, doing it my way. We brought in all operating guys—all had done startups, all had technical backgrounds. In 5 years we were one of the top firms in the Valley by any measure. I had found my obsession.
It’s Not the Calls You Take, It’s the Calls You Make One of my sayings
You are the creator of your destiny. In whatever business you’re in, there is always so much coming at you that you can stay insanely busy just responding. Don’t do that. Always think about what is your agenda, what do you want to make happen, what do you want the future to look like. This is not so easy.
Go Where the Action Is: It’s not over in the Valley
Now 35 years later, should you still move to the Valley (or Hollywood, or London, or Chicago!—or wherever the action is in your area of interest?). I can’t speak to the other places, but I”ll tell you what, it’s not over in the Valley. From electric cars to drones, DNA sequencing to robotic surgery, enterprise software to social media –the size and variety of these markets makes the Valley of my early days look bush league. There’s no end in sight. The valley startup culture and talent pool is unique in the world. If you think maybe you should go there—maybe you should.
I retired in 2006. My husband and I bought a vineyard—so I’m a beginner again! With another startup!
A Word to the Ladies Here
I understand a third of the class is women. I have always said, with an annoyed attitude when people ask, that there are no obstacles to women these days, just look at me! That’s the safe way to answer, right? But it’s not entirely true. One of the gifts of talking to you ladies here is that I forced myself to reflect on this. I’ll just mention two obstacles that hit me—neither of which I even reacted to at the time, just accepted.
I wanted to go to Caltech, but they didn’t take women undergrads until 1970. I wasn’t mad about that; I just thought it was my fault for being interested in guy things. So I dated a Caltech student and got to use their computer—first computer I ever met too—a monster. Structural obstacles like this are over with for you. Good riddance.
Remember that business of starting Foundation Capital when my first firm blew up? I did it because I didn’t have a choice—couldn’t get a job. Really. I spent a couple of months talking with the few VC firms that I was willing to join. (yes, I was picky) It became clear it was going to take a long time to get into one, and I didn’t have a long time. I didn’t want to lose my momentum. Mind you, I was one of the top handful of VCs in the business at the time. Not on the Midas list yet, because it hadn’t been invented, but anybody could see that my results were heading toward extraordinary. I have to think that a guy with my numbers would have been snapped up pretty fast. For me, starting the firm and raising the money was way faster. Don’t you think that’s stunning? A pretty big fat obstacle. So we went from Boogie Board to money in the bank in 6 months. Not that I’m sorry—it turned out great. But you ambitious women will surely face something like this in your career. Just go around it! There is always a way. Note on the VC business, only 4% of senior VCs are women, according to Fortune Magazine. I don’t think it’s changing anytime soon either.
Now to be fair, consider your advantages: you’re much more memorable than most of the guys, they won’t forget you, and there is a self selection: the men who have the guts to do business with you have the extra self confidence to be more successful. The guys that wanted me on their board of directors had moxy—because of course they had heard all the crap about how I was a dragon lady (all ambitious women get called that as you know) and they still went for it. Who knows—could be why my companies were so successful…
I often walk among my grapevines and think how grateful I am for my life right now. But if the vines had come first, without the adventure and hard work, it wouldn’t be nearly as sweet. So that’s my story so far—but it’s not over yet, because the cabernet is really good!
So now, for each of you, go create your own unique adventure. You are done preparing—go do it! Make a plan, but don’t stick to it. Let chance favor your prepared mind. Break rules, find your obsession, be extraordinary!”
View the speech in its entirety here
Startups are not smaller versions of large companies, but interestingly we see that companies are not larger versions of startups.
I’ve been spending some time with large companies that are interested in using Lean methods. One of the conundrums is why does innovation take so long to happen in corporations? Previously Hank Chesbrough and I have written about some of the strategic issues that impede innovation inside large corporations here and here.
While they both emphasize getting out of the building and taking to customers, they’re not the same. Here’s why.
Urgency Drives Innovation Speed
Startups operate quickly – at a speed driven by the urgency of a proverbial gun-to-their-head called “burn rate.” Any founding CEO can tell you three numbers they live and breathe by:
- the amount of cash left in the bank
- their burn rate (the amount of money they’re spending monthly minus any revenue coming in) and
- the day they run out of money and have to shut the doors (or get a new round of funding.)
If you’re a founder, there’s a constant gnawing fear in the pit of your stomach that it will all end badly; running out of money, having to fire all your employees and failing publicly. (Whoever says, “Failure feels OK in startups has clearly never run a startup.)
A startup CEO adroitly translates this urgency to their employees not with reminders of “we’ll all soon be out of jobs,” but with a bias to action – making measureable progress in getting minimum viable products in front of customers, beating competitors, getting users/customer quickly, and generating revenue. Startups build a culture of commitment and drive to make things happen.
In large companies, the employees are no less smart, but the organization is optimized to deliver repeatable products, revenue and profits. To support this, its corporate culture is dominated by process, procedures and incentives. In large companies, even the most innovative projects (whether it’s process innovation, continuous innovation or disruptive innovation) are not going to make or break the company – and employees know it. Canceling a project may frustrate the team members working on it but unlike in a startup, they still have their jobs, offices and houses and the company won’t close. Attempts to instill urgency via a gun-to-the-head philosophy are frowned on by Corporate HR. All of this adds up to a “complacency culture” rather than an “urgency culture.”
Customer Development versus Design Thinking
This real sense of urgency—and how it shapes employee attitudes and practices – is a big reason why innovation processes in startups are different from those in large companies. One of these processes is how startups versus companies learn from customers. It’s the difference between Customer Development versus Design Thinking.
Customer Development and Design Thinking share similar characteristics in exploring customer needs, but their origins, differences and speed in practice are very different.
I invented the Customer Development process trying to solve two startup problems. First, most Silicon Valley startups were (and primarily still are) technology-driven. They are founded and funded by visionaries who already have products (or product ideas based on technology innovation) and now need to find customers and markets. (Think of the early days of Intel, Apple, Cisco, Google, Facebook, Twitter, etc.) Second, burn rate and dwindling cash meant startups had to find these customers and the attendant product/market fit rapidly – before they ran out of money. These two characteristics– a technology-driven product already in hand and a need for speed– drove the unique characteristics of Customer Development. These include:
- Moving with speed, speed and did I say speed?
- Starting with a series of core hypotheses – what the product is, what problem the product solves, and who will use/pay for it
- Finding “product/market fit” where the first variable is the customer, not the product
- Pursuing potential customers outside the building to test your hypotheses
- Trading off certainty for speed and tempo using “Good enough decision making“
- Rapidly building minimum viable products for learning
- Assuming your hypotheses will be wrong so be ready for rapid iterations and pivots
Design Thinking also focuses on understanding the needs of potential customers outside the building. But its motivations and tactics are different from those of Customer Development. Design Thinking doesn’t start with a founder’s vision and a product in-hand. Instead it starts with “needs finding” and attempts to reduce new product risk by accelerating learning through rapid prototyping. This cycle of Inspiration, Ideation and Implementation is a solutions-based approach to solving customer problems.
Design Thinking is perfectly suited to situations where the process isn’t engineering-driven; time and money are abundant and the cost (and time) of a failure of a major project launch can be substantial. This process makes sense in a large company when the bets on a new product require large investments in engineering, a new factory or spending 10s or 100s of millions on launching a new product line.
But therein lies the conundrum. Because of the size of the dollars at stake (and your career), lots of effort is spent to make sure your understanding of the customer and the product is right. At times large companies will drag out these design-thinking investigations (prototype after prototype) for years. Often there is no place where urgency gets built into the corporate process. (Just to be clear this isn’t a failure of the process. Urgency can be built in, it’s just that most of the time it’s not.)
Both Models Work for Large Companies
There is no right process for all types of corporate innovation. In a perfect world you wouldn’t need Customer Development. No corporate R&D would happen before you understood customer problems and needs. But until that day, the challenge for executives in charge of corporate innovation is to understand the distinction between the two approaches and decide which process best fits which situation. While both get product teams out of the building the differences are in speed, urgency and whether the process is driven by product vision or customer needs.
In one example, you might have a great technology innovation from corporate or division R&D in search of customers. In another, you might have a limited time to respond to rapidly shifting market or changing competitive environment. And in still another, understanding untapped customer needs can offer an opportunity for new innovation.
Often I hear spirited defenses for Customer Development versus Design Thinking or vice versa, and my reaction is to slowly back out of these faith-based conversations. For large companies, it isn’t about which process is right – the reality is that we probably haven’t invented the right process yet. It’s about whether your company is satisfied with the speed, quality and size of the innovations being produced. And whether you’re applying the right customer discovery process to the right situation. No one size fits all.
There’s ample evidence from the National Science Foundation that Customer Development is the right process for commercializing existing technology. There’s equally compelling evidence from IDEO the Stanford D-School and the Biodesign Innovation Process that Design Thinking works great in finding customer needs and building products to match them.
- Customer Development and Design Thinking are both customer discovery processes
- Customer Development starts with, “I have a technology/product, now who do I sell it to?”
- Design Thinking starts with, “I need to understand customer needs and iterate prototypes until I find a technology and product that satisfies this need”
- Customer Development is optimized for speed and “good enough” decision making with limited time and resources
- Design Thinking is optimized for getting it right before we make big bets
Filed under: Big Companies versus Startups: Durant versus Sloan | 19 Comments »
This week the National Science Foundation goes Lean on education by providing $1.2 million to educators who want to bring their classroom innovations to a wider audience.
The I-Corps program started when the U.S. National Science Foundation adopted my Lean LaunchPad class. Their goal was to train University scientists and researchers to use Lean Startup methods (business model design, customer development and agile engineering) to commercialize their science. Earlier this month the National Institutes of Health announced I-Corps @ NIH, to help scientists doing medical research take their innovations from the lab-bench to the bedside and accelerate translational medicine.
This week, the NSF is announcing the next step in the I-Corps program– I-Corps for Learning (I-Corps L). This version of I-Corps is for STEM educators – anyone who teaches Science, Technology, Engineering and Math from kindergarten to graduate school, and wants to learn how to bring an innovative teaching strategy, technology, or set of curriculum materials to a wider audience. Following a successful pilot program, the NSF is backing the class with $1.2 million to fund the next 24 teams.
The Problem in the Classroom
A frustration common to both educators and policymakers is how difficult it has been to get new, innovative, education approaches into widespread use in classrooms where they can influence large numbers of students. While the federal government and corporations have dumped a ton of money into STEM education research, a disappointing few of these brave new ideas have made it into practice. These classroom innovations often remain effectively a secret – unknown to most STEM educators or the research community at large.
It turns out that on the whole educators are great innovators but have had a hard time translating their ideas into widespread adoption. What we had was a very slow classroom innovation diffusion rate. Was there any was to speed this up?
A year ago Don Millard of the National Science Foundation (who in a previous life had been a STEM Educator) approached me with a hypothesis that possibly could solve this problem. Don observed that educators with innovative ideas who actively got out of their classrooms and tested their innovations with other educators/institutions/students had a much better adoption rate.
Up until now there was no formal way to replicate the skills of the educators who successfully evangelized their new concepts. Don’s insight was that the I-Corps model being rolled out for scientists might work equally well for educators/teachers. He pointed out that there was a close analogy between scientists trying to bring product discoveries to market and educators getting learning innovations into broad practice. Don thought that a formal Lean LaunchPad/I-Corps methodology might be exactly what educators needed to understand how their classroom innovations could be used, how to get other educators and institutions to adopt them, and how to articulate their value to potential investors .
Don then recruited Karl Smith from the University of Minnesota to pilot a class of 9 teams made up of STEM educators. Karl recruited a teaching team (Ann McKenna, Chris Swan, Russ Korte, Shawn Jordan, Micah Lande and Bob MacNeal) and Jerry Engel trained them. The team ran their first I-Corps for Learning class earlier this year.
Karl and his teaching team really nailed it. So much so that the NSF is now rolling out I-Corps for Learning on a larger scale.
I-Corps for Learning Details
NSF will provide up to $1.2 million to support 24 teams. The I-Corps L cohort teams will receive additional support — in the form of mentoring and funding — to accelerate innovation in learning that can be successfully scaled, in a sustainable manner.
To be eligible to pursue funding, applicants must have received a prior award from NSF (in a STEM education field relevant to the proposed innovation) that is currently active or that has been active within five years from the date of the proposal submission. Consideration will be given to projects that address K-12, undergraduate, graduate, and postdoctoral research, as well as learning in informal science education environments.
Each team will consist of:
- The principal investigator (who received the prior award);
- An entrepreneurial lead (who is committed to investigate the landscape surrounding the innovation); and
- A mentor (who understands the evidence concerning promise, e.g., from an institutional education-focused center or commercial background that will help inform the efforts)
The outcomes of the pilot projects are expected to be threefold:
- A clear go/no go decision concerning the viability and effectiveness of the learning-oriented resources/products, practices and services,
- An implementation “product” and process for potential partners/adopters, and
- A transition plan to move the effort forward and bring the innovation to scale
Proposals from potential I-Corps L teams will be accepted through September 30, 2014. Class starts January 2015.
Check out the I-Corps for Learning website here.
- The diffusion of STEM classroom innovations is excruciatingly slow
- The Lean LaunchPad/I-Corps model may accelerate that process
- I-Corps for Learning is accepting applications